June 30, 2022
Hello, and welcome to Protocol Entertainment, your guide to the business of the gaming and media industries. This Thursday, we’re discussing the ambitions of Pokémon Go maker Niantic after its studio layoffs and canceled projects, as well as the marketing mess surrounding Sega’s new Sonic Frontiers.
Pokémon Go sent Niantic to the moon. But now the San Francisco-based augmented reality developer has returned to earth, and it’s been trying to chart its way back to the stars ever since. The company yesterday announced layoffs of about 8% of its workforce (about 85 to 90 people) and canceled four projects, Bloomberg reported, signaling another disappointment for the studio that still generates about $1 billion in revenue per year from Pokémon Go.
Finding its next big hit has been Niantic’s priority for years, and the company has been coming up short. For much of the past year or so, Niantic has turned its attention to the metaverse, with hopes that its location-based mobile games, AR tech and company philosophy around fostering physical connection and outdoor exploration can help it build what it now calls the “real world metaverse.”
Niantic has struggled to replicate Pokémon Go. It’s starting to look like an AR version of Nintendo’s monster-catching franchise was a flash in the pan, combining a novel use of phone cameras and geolocation with a popular and enduring gaming concept. Because Niantic has not had a similar hit since.
Campfire is an example of Niantic’s new focus. While Niantic appears to be winding down its third-party projects based on popular media franchises, it’s now trying to build new kinds of software experiences more in line with its real-world metaverse vision.
Niantic is far from giving up on gaming. But the company clearly sees its future less in striking gold again with another Pokémon Go and more in building out the software products and technical infrastructure that support its vision for next-gen computing.
Niantic now appears to be facing a significant roadblock in realizing this vision, where its attempts to create a new revenue driver like Pokémon Go have been met with failure, and it’s looking for new frontiers to expand into.
But the company’s excitement around the promise of AR has been unwavering, and its unique approach to the metaverse may ultimately prove prescient. What Niantic might need is not another game but a breakthrough hardware device — like AR glasses.
— Nick Statt
Getting smarter about hybrid work: Hybrid work success looks different depending on who you ask. Your company is made up of a cast of players, each with a role critical to a competitive and thriving business, and with an eye on their North Star: employee happiness. How do you appease all those stakeholders?
“We are not saying we are not focusing on the PS5 users. But because we are latecomers to monitors and headphones for [the] gaming segment, we believe we have a chance to catch up … I believe if top players from top companies mention ‘Oh, Sony’s Inzone is great,’ we can catch up.” — Kazuo Kii, Sony’s president of home entertainment and sound products, spoke to The Washington Post about the company’s new Inzone line of PC gaming products.
“Undoubtedly there are services provided — they build amazing hardware and provide store services. But the problem is that it feels like everybody agreed on this 30 percent and that’s what we’re struck with. It doesn’t feel like there’s any competition. The Chinese companies coming out with headsets are the same. Why would they change it?” — Daniel Sproll, the CEO of VR studio and Puzzling Places creator Realities.io, went on the record with the Financial Times to criticize Meta’s 30% commission on VR apps.
Blizzard makes a rare acquisition. The developer announced on Wednesday it would acquire Boston-based studio Proletariat, the creator of the fantasy battle royale game Spellbreak, according to VentureBeat. The team will work on World of Warcraft.
Subscriptions are slated to push gaming revenue even higher. A new report from DFC Intelligence forecasts record software revenue for the PC and console gaming space of $72 billion in 2022. The firm says subscription platforms, not new releases, will drive the growth.
Xbox studio chief responds to crunch accusations. Matt Booty, the head of Xbox Game Studios, told employees last week he was “confident” workers at subsidiary Bethesda were not overworking and that the industry has changed a lot in the past decade, according to Kotaku.
NieR:Automata gets a second life. The celebrated Japanese action role-playing title from PlatinumGames has sold more than 6.5 million copies, the studio said this week. It’s launching on Nintendo Switch later this fall.
NFT sales are plummeting. A new story from Bloomberg quotes data tracker DappRadar as saying the NFT market has “fallen off the cliff,” with sales volume on OpenSea down 75% since May and approaching the lowest level since July of last year.
The rise of asset store creators. With rising interest in the metaverse comes more appetite for virtual 3D assets, and a new article from The Verge features interviews with artists and game developers who now make a living creating high-fidelity assets for Epic’s Unreal and Unity.
The civil rights hero behind Nintendo’s Kirby. The lovable pink blob is in fact named after John Joseph Kirby, a lawyer who once worked for Nintendo and passed away last year. The Washington Post spoke to Kirby’s son about his father’s rich legacy and how it’s intertwined with the game industry.Tencent’s Lightspeed Studios is transitioning to AAA. The developer, known best for creating PUBG Mobile for Krafton, is now taking on a big-budget, open-world project based on the works of celebrated Chinese author Jin Yong.
Game companies love their secrets. The industry’s penchant for hype and mystery sometimes leads to exciting reveals, and sometimes it leads to marketing misfires, like with Sega’s new Sonic Frontiers. The new game, due out later this year, is a return to the more open-world feel of the iconic and beloved Sonic Adventure series for the Dreamcast. But gameplay trailers shown over the last month and a strict embargo on press previews gave the public an incomplete and ultimately disappointing impression of the game, leading some fans to call for Sonic Frontiers to be delayed in the hopes it could be salvaged like 2020’s breakout film adaptation was.
The issue lies in how Sega and its Team Sonic studio have handled early demos. Press was not allowed to talk about how Frontiers will mix its open-world-style environment with more classic 2D and 3D levels until June 29, nearly a month after the initial and underwhelming gameplay preview went live and two weeks after press was given hands-on time with the game at Geoff Keighley’s Summer Game Fest event.
Some in the media tried to calm the storm by stressing this point ahead of the embargo lift, but the game’s YouTube trailers and forum threads are filled with commenters scratching their heads at the confounding rollout. The debacle has left many Sonic fans mired in a confusing marketing mess of Sega’s own making rather than feeling excited and hopeful for the next big 3D Sonic game.
— Nick Statt
Getting smarter about hybrid work: Rightsizing, where each meeting space is outfitted for a specific purpose, is top of mind for facilities pros. Reconfiguring rooms to support new hybrid work schedules enables personalization and a safe return to the office. Understanding how employees will use spaces as they come back will be critical for success.
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